Sweden's growth is fuelling the Estonian economy

30.11.2010, 09:39

The fact that the Swedish economy expanded 6.9% year on year in the third quarter and 2.1% in quarter-to-quarter is not only good news to Estonian exporters, but for all Estonians who can now expect banks to loosen their purse strings. Many Estonian businessmen interviewed by Äripäev said that Sweden was their top export market.

Rolf Relander, the owner of Bellus Furniture, a furniture maker based in Haljala that exports about a third of its output to Sweden, said that the most important thing is not how much the Swedish economy expanded, but that there is good news. He said that consumers often act on emotions and buying behaviour is greatly influenced by whether the news is good or bad.

"A few year ago there were mainly negative news coming from Sweden, Swedish companies were reducing workforce and our orders from Sweden also fell. Now, when we are having these positive news, people dare to spend again," said Relander, but added that reaction to bad news is always faster than to good news.Relander said that one key reason why the Swedish has been booming is that the krona has appreciated and this has made imports cheaper for Swedes.

"I have noted for some time that Swedish construction companies have been much more active in ordering our products and are remarkably interested in the Baltic business," says Jaan Luts, CEO of Tartu Maja Betoontooted that produces pre-cast concrete elements.

Luts said that at present his company sends about a quarter of its exports to Sweden, mainly through its Latvian subsidiary. The company has two or three large customers in Sweden, and the goal is to find new sales representatives for Sweden.

"If the construction market starts to grow, prices would increase and this is giving us more opportunities for the Swedish market," said Luts, explaining that since concrete products are heavyweight items, transport cost forms a significant portion from the end price.

Economist Hardo Pajula says that Swedish growth figures have a direct positive impact on Estonia, first of all, through banking and trickling down to other sectors. Pajula said that since the lion's share of Estonian banking was owned by the Swedes, it will help also other sectors to survive apart from export industries.